NAC 116B.010Definitions. (NRS 116B.805)As used
in this chapter, unless the context otherwise requires, the words and terms
defined in NAC 116B.020 and 116B.030 have the meanings ascribed to them in those
sections.

NAC 116B.150Executive board: Determination by Commission of whether members
have performed their duties. (NRS 116B.425, 116B.805)In
determining whether a member of the executive board has performed his or her
duties pursuant to NRS 116B.425,
the Commission may consider whether the member has:

1. Acted outside the scope of the authority
granted in the governing documents;

2. Acted for reasons of self-interest, gain,
prejudice or revenge;

3. Committed an act or omission which
amounts to incompetence, negligence or gross negligence;

4. Except as otherwise required by law or
court order, disclosed confidential information relating to a unit’s owner, a
member of the executive board or an officer, employee or authorized agent of
the association unless the disclosure is consented to by the person to whom the
information relates;

5. Impeded or otherwise interfered with an
investigation of the Division by:

(a) Failing to comply with a request by the
Division to provide documents;

(b) Supplying false or misleading information to an
investigator, auditor or any other officer or agent of the Division; or

(c) Concealing any facts or documents relating to
the business of the association;

8. Cooperated with the Division in resolving
complaints filed with the Division; and

9. Caused the association to:

(a) Comply with all applicable federal, state and
local laws and regulations and the governing documents of the association;

(b) Uniformly enforce the governing documents of
the association;

(c) Hold meetings of the executive board with such
frequency as to properly and efficiently address the affairs of the
association;

(d) Obtain, when practicable, at least three bids
from reputable service providers who possess the proper licensing before
purchasing any such service for use by the association;

(e) Consult with appropriate professionals as
necessary before making any major decision affecting the association or the
common elements;

(f) Deposit all funds for investment in government
securities that are backed by the full faith and credit clause of the United
States Constitution or in a financial institution whose accounts are insured by
the Federal Deposit Insurance Corporation, the National Credit Union Share
Insurance Fund, the Securities Investor Protection Corporation or a private
insurer approved pursuant to NRS
678.755;

(h) Establish policies and procedures for the
disclosure of potential conflicts of interest and the appropriate manner by
which to resolve such conflicts;

(i) Establish policies and procedures that are
designed to provide reasonable assurances in the reliability of financial
reporting, including, without limitation, proper maintenance of accounting
records, documentation of the authorization for receipts and disbursements,
verification of the integrity of the data used in making business decisions,
facilitation of fraud detection and prevention and compliance with the
applicable laws and regulations governing financial records;

(j) Prepare interim and annual financial statements
that will allow the Division, the executive board, the residential unit owners
and the accountant or auditor to determine whether the financial position of
the association is fairly presented in accordance with the provisions of NAC 116B.200 to 116B.240,
inclusive;

(k) Make the financial records of the association
available for inspection by the Division in accordance with the applicable laws
and regulations of this State;

(l) Cooperate with the Division in resolving
complaints filed with the Division; and

(m) Adopt and fairly enforce the collection
policies of the association.

1. For purposes of providing recommended
reporting principles and practices of financial accounting for associations for
condominium hotels, the Commission hereby adopts by reference the Guide to
Homeowners’ Associations and Other Common Interest Realty Associations. A
copy of the publication may be obtained for the price of $222 from
Practitioners Publishing Company, P.O. Box 966, Fort Worth, TX 76101-0966, by
telephone at (800) 431-9025 or at the Internet address http://ppc.thomson.com/SiteComposer2/Index.cfm?numProdClassID=201&
txtFuse=dspShellProductDetail&numSiteID=2&numTaxonomyTypeID=29&numTaxonomyID=232.

2. If the publication adopted by reference
in subsection 1 is revised, the Commission will review the revision to
determine its suitability for this State. If the Commission determines that the
revision is not suitable for this State, the Commission will hold a public
hearing to review its determination and give notice of that hearing within 90
days after the date of the publication of the revision. If, after the hearing,
the Commission does not revise its determination, the Commission will give
notice that the revision is not suitable for this State within 90 days after
the hearing. If the Commission does not give such notice, the revision becomes
part of the publication adopted by reference pursuant to subsection 1.

NAC 116B.170Contents of budget to maintain reserve. (NRS 116B.600, 116B.805)An
executive board shall, in addition to the requirements set forth in paragraph
(b) of subsection 1 of NRS
116B.600, include in the budget to maintain the reserve:

1. An estimate of the amount of reserve
funds necessary in the projected fiscal year, based on comparative bids or
industry standards, to complete the repairs, replacement or restoration of the
major components of the common elements as recommended in the study of reserves
conducted pursuant to NRS 116B.605;
and

2. If the projected balance of the reserve
account at the end of the budgeted fiscal year is less than the amount required
to adequately fund the reserves on a reasonable basis at the end of the
budgeted fiscal year, as determined by the study of reserves conducted pursuant
to NRS 116B.605:

(a) The reason for the difference; and

(b) How this difference is proposed to be resolved
by the executive board.

NAC 116B.180Availability of records of association: “Regular working hours”
interpreted. (NRS
116B.670, 116B.805)As used
in NRS 116B.670, “regular
working hours” means a period of at least 4 consecutive hours per week.

NAC 116B.190Annual fee required from certain associations for deposit in
Account for Common-Interest Communities and Condominium Hotels. (NRS 116B.620, 116B.805)The
amount of the fee that an association is required to pay pursuant to NRS 116B.620 is $3 for each
residential unit in the association.

NAC 116B.200Preparation, contents and distribution of interim financial
statements. (NRS
116B.580, 116B.805)The interim
financial statements of an association must be prepared quarterly using fund
accounting or a single-column presentation and must:

1. Include, at a minimum:

(a) A balance sheet, including operating and
reserve funds, that indicates the assets, liabilities and fund balances or
members’ equity if a single-column format is used;

(b) A statement of revenues and expenses for all
operating and reserve activities, presenting information about all revenues,
including assessments, expenses, expenditures and reserve transfers;

(c) A schedule comparing the details of the actual
reserve revenues and expenses of the association with the operating budget for
the association;

(d) A schedule comparing the details of the actual
reserve revenues and expenses associated with the major components of the
common elements with the reserve budget for the major components of the common
elements;

(e) Any changes in the fund balances to be
presented on the statement of revenues and expenses if fund accounting is used;
and

(f) A footnote which states that the association is
in compliance with paragraph (b) of subsection 2 of NRS 116B.590 and that reserve
funds have not been used for daily maintenance.

2. Be prepared on a full accrual basis.

3. Be prepared by, or the preparation of the
interim financial statements must be supervised by, a person with accounting
knowledge and experience in the preparation of financial statements.

4. Be distributed at least quarterly,
promptly upon completion, to the treasurer of the association, the community
manager, each member of the executive board and, if requested in writing, to
the hotel unit owner.

NAC 116B.210Presentation and contents of interim financial statements subject
to audit or review. (NRS 116B.580, 116B.585, 116B.805)The
interim financial statements of an association subject to an audit or review
pursuant to NRS 116B.585 must
be presented using fund accounting and must include, at a minimum:

1. An operating fund which reflects the
accounting transactions surrounding the daily maintenance and service
operations of the association; and

2. A reserve fund which reflects the
accounting transactions pertaining to repair, replacement and restoration of
the major components of the common elements as described in paragraph (b) of
subsection 2 of NRS 116B.590.

NAC 116B.230Inclusion
of additional funds in financial statements. (NRS 116B.580, 116B.805)The
financial statements of an association may provide for such other funds as the
association deems appropriate to report the transactions of separate business
activities, special assessments and contingency or other restricted funds.

1. The review of the financial statements of
an association must be performed in accordance with the Guide. The
financial statements must include a full presentation of accrual-basis
accounting prepared pursuant to subsection 1 of NAC
116B.220. The supplementary information may be compiled or reviewed.

2. The person performing the annual review
for an association must:

(a) Be a certified public accountant licensed
pursuant to chapter 628 of NRS.

NAC 116B.250Annual registration with Division: Required information. (NRS 116B.805)An
association must include on the annual registration form filed with the
Division the following information:

1. The total amount of budgeted revenues and
expenses of the association;

2. Whether the financial statements of the
association were audited or reviewed and, if so, the most recent fiscal
year-end for which the audit or review was completed and accepted by the
executive board; and

3. Whether the audit opinion is qualified or
unqualified or whether the review report is modified or unmodified.

NAC 116B.300Persons authorized to take action required to be taken by hotel
unit owner. (NRS
116B.805)Any
action required to be taken by the hotel unit owner may be undertaken by the
hotel unit owner’s agent or employee or the operator of the condominium hotel.

(a) A balance sheet which includes operating and reserve
funds and which contains the assets, liabilities and fund balances or members’
equity if a single-column format is used;

(b) A statement of revenues and expenses for all
operating and reserve activities which presents information regarding all revenue,
including assessments, expenses, expenditures and reserve transfers;

(c) A schedule:

(1) Comparing the details of the actual
operating revenues and expenses of the hotel unit with the operating budget for
the hotel unit and shared components; and

(2) Presenting the current year’s actual
operating revenues and expenses on a comparative basis with the previous year;

(d) A schedule comparing the details of the actual
reserve revenues and expenses with the budget; and

(e) Any changes in the fund balances, which must be
presented on the statement of revenues and expenses if fund accounting is used.

2. Be prepared by, or the preparation of the
interim financial statements must be supervised by, a person with accounting
knowledge and experience in the preparation of financial statements.

3. Be made available for inspection at a
reasonably convenient location within the condominium hotel or the project of
which the condominium hotel is a part during regular working hours upon request
by residential unit owners.

(a) Be prepared in accordance with generally
accepted accounting principles and must include, at a minimum:

(1) A comparative balance sheet for the
operating fund and reserve fund which presents assets, liabilities and fund
balances;

(2) A comparative statement of revenues and
expenses for the operating fund and reserve fund which presents information
about all revenues and expenses;

(3) A comparative statement of changes in fund
balances which reconciles beginning and ending fund balances with results of
operations;

(4) A comparative statement of cash flows;

(5) Any note disclosures as may be required by
the Guide; and

(6) The following unaudited supplementary
information:

(I) Any disclosures regarding the
reserves pursuant to NRS 116B.605
and as may be required by the Guide;

(II) An accompanying schedule which
compares details of the actual operating revenues and expenses of the hotel
unit owner against the budgeted amounts; and

(III) An accompanying schedule comparing
the details of the actual reserve revenues and expenses of the hotel unit owner
associated with the major components of the shared components or major
components of the hotel unit against the budgeted expenses for the shared
components or the applicable components of the hotel unit.

(b) Be prepared and completed not later than 210
days after the end of the fiscal year of the hotel unit.

(c) Be made available to the Division not later
than 30 days after a request from the Division.

(d) Include on the annual registration form filed
with the Division the following information:

(1) The amount of budgeted expenses, including
both shared expenses and total expenses;

(2) The date on which the most recent audit of
the financial statements was completed; and

(3) Whether the audit opinion is qualified or
unqualified.

2. The person performing the annual audit
for a hotel unit owner must:

(a) Be a certified public accountant licensed
pursuant to chapter 628 of NRS.

NAC 116B.340Inclusion of certain additional information in financial
statements. (NRS
116B.805)The
financial statements of a hotel unit owner may provide for such other
information as the hotel unit owner deems appropriate to report the
transactions of separate business activities, special assessments, contingency
or other restricted funds or any other reserve or separate account used for any
purpose other than the repair, replacement or restoration of the major
components of the shared components or the major components of the hotel unit.

1. For purposes of NRS 116B.610, a reduction in the
useful life of each major component of the shared components and each major
component of the hotel unit may be determined based upon local or other
applicable industry standards.

2. In addition to the criteria set forth in
subsection 1, a reserve study specialist may also consider reasonable business
or operating concerns or objectives of the hotel unit owner in determining a
reduction in the useful life of the shared components and each major component
of the hotel unit. A reduction in the useful life based upon such concerns or
objectives must be clearly noted in the reserve study or review of the reserve
study by the hotel unit owner.

3. A reserve study must clearly disclose the
basis for or the factors used by the reserve study specialist in determining
the useful life or remaining useful life of each major component of the shared
components and each major component of the hotel unit.

1. Except as otherwise provided in
subsections 2 and 3, a hotel unit owner may not charge more than $160 for
preparing the certificate required by subsection 3 of NRS 116B.760.

2. If a unit’s owner or the authorized agent
of the unit’s owner requests that the certificate described in subsection 1 be
provided sooner than 3 business days after the date of the request, the hotel
unit owner may, in addition to the fee set forth in subsection 1, charge a fee
not to exceed $125 to expedite the preparation of the certificate.

3. In addition to the fees set forth in
subsections 1 and 2, the hotel unit owner may charge a reasonable fee for
additional copies or any other service.

Receipt of Gifts, Incentives, Gratuities, Rewards or Other
Items of Value

NAC 116B.400Restriction on members of executive boards and officers of
associations. (NRS
116B.695, 116B.805)No
member of an executive board or officer of an association shall receive, in the
aggregate, any gift, incentive, gratuity, reward or other item of value
pursuant to subsection 2 of NRS
116B.695 in any calendar year which exceeds the sum of $100.

NAC 116B.410Restriction on community managers and employees of community
managers. (NRS
116B.695, 116B.805)No
community manager or employee of the community manager shall receive, in the
aggregate, any gift, incentive, gratuity, reward or other item of value
pursuant to subsection 2 of NRS
116B.695 in any calendar year which exceeds the sum of $500.

1. As used in NRS 116B.695, the term “gifts,
incentives, gratuities, rewards or other items of value” does not include:

(a) Any prepaid tuition for an approved class
within the State for members of an executive board, officers of an association,
community managers or employees of the community manager;

(b) The cost or value of an approved class that is
offered free of charge; and

(c) The cost or value of any breakfast, lunch,
snack or hot or cold nonalcoholic beverage provided at an approved class or
during the breaks of an approved class.

2. A member of the executive board or an
officer of the association who attends or participates in an approved class
must disclose his or her attendance or participation in the approved class to
the executive board at the next meeting of the executive board after the date
of the approved class.

3. As used in this section, “approved class”
means a course which has been approved pursuant to the provisions of this
chapter and which at all times satisfies the requirements of this chapter.

NAC 116B.430Compliance with statutory prohibition. (NRS 116B.695, 116B.805)Nothing
in NAC 116B.400, 116B.410
and 116B.420 is to be construed as permitting a
member of an executive board, an officer of an association, a community manager
or an employee of the community manager to solicit or accept any form of
compensation, gratuity or other remuneration in violation of the provisions of
subsection 1 of NRS 116B.695.

1. In addition to the information required
by NRS 116B.735, a public
offering statement must also contain the following information:

(a) If a contract to manage the shared components
and the hotel unit exists, the name of the hotel operator or management company
that is a party to the contract and the terms of the contract; and

(b) A statement which reads substantially as
follows:

Chapter
116B of NRS does not address or require the disclosure of information
regarding the use of your unit as a transient rental. If you desire or intend
to use your unit for transient rental purposes, you should be aware that,
before the execution of a contract to purchase a unit, federal law severely
limits the provision of any information regarding the use of your unit for
transient rental purposes. In making a decision whether to use your unit for
transient rental purposes after executing a contract to purchase the unit, you
should carefully evaluate all information provided to you by a rental
management company or the hotel operator or an agent of the hotel operator. As
part of your review of such information, you should also consult with a
competent professional such as an attorney or an accountant to assist you in
your review and evaluation of the information provided by the rental management
company or the hotel operator or his or her agent.

2. If the name of the hotel operator or
management company and the terms of a contract are included pursuant to
paragraph (a) of subsection 1, an additional statement providing that no
guarantees, representations or warranties are made regarding the identity of
the hotel operator or management company or the name of the condominium hotel
may also be included.

NAC 116B.510Resale packages: Inclusion of information relating to certain
rental management agreements. (NRS 116B.785, 116B.805)In
addition to the information required by subsection 1 of NRS 116B.760, a unit’s owner or
the authorized agent of the unit’s owner must also include with the resale
package:

1. A statement informing the purchaser
whether the unit to be sold is subject to any rental management agreement that
is legally binding upon the purchaser after the purchase of the unit; and

2. If the unit to be sold is subject to a
rental management agreement that is legally binding upon the purchaser after
the purchase of the unit, a copy of the rental management agreement and any
amendments or modifications.

NAC 116B.520Public offering statements and resale packages: Additional
contents. (NRS
116B.785, 116B.805)In
addition to the information required by NRS 116B.735 and 116B.760, the public offering
statement and resale package must also include, to the extent available:

1. A narrative description of all the shared
components of the condominium hotel, together with any other portion of the
hotel unit not otherwise characterized as shared components, for which the unit
owners will be assessed a portion of the operation and maintenance expenses;

2. A schedule summarizing the representative
charges, expenses or assessments a prospective buyer would be required to pay
each month for each type of unit and any disclaimer that is appropriate to
present such information in a fair and complete manner, including at least a
statement indicating that the information provided:

(a) Is only a projected estimate and the actual
charges, expenses or assessments may vary from actual expenditures or in
conjunction with actual operating conditions or as necessary to accommodate
changed circumstances;

(b) Is only a categorical presentation and does not
specify each charge, expense or assessment separately; and

(c) Does not provide for any additional adjustments
to charges, expenses or assessments that may occur due to a transient rental
program;

3. If completed, a copy of the most recent
audited or reviewed financial statements;

4. If completed, a copy of the most recent
reserve study for the major components of the shared components or the major
components of the hotel unit;

5. Any supplemental disclosure statement
form prepared by the Division; and

6. The following cautions or warnings in
bold type and large font:

1. Are you aware of
all charges, expenses and assessments for which you will be responsible as a residential
unit owner, both on a monthly and annual basis?

2. Do you
specifically understand your obligations with respect to: (1) shared expenses;
(2) reserve requirements for the major components of the shared components and
the major components of the hotel unit; and (3) the budget for the hotel unit
and the association? Are you aware of the potential assessments or costs for
which you may have to pay your proportionate share? Are you aware that the
hotel unit owner has the power to place a lien on your unit and foreclose for
unpaid shared expenses or other charges?

3. Do you
understand the relations and interactions among you and the association, other
residential unit owners, the hotel unit owner, hotel operator or management
company? Are you aware that the majority of the condominium hotel may be owned
or controlled by the hotel unit owner and that you will be subject to
obligations and costs which will be determined by the operation and business
goals of the condominium hotel, and that these obligations and costs may change
in the future? Are you aware that the role of the association in the governance
and operation of the condominium hotel may be extremely limited?

NAC 116B.530Preparation by Division of supplemental disclosure statement
form. (NRS
116B.785, 116B.805)The
Division may prepare a supplemental disclosure statement form which encourages
prospective buyers to be informed and which addresses matters that the Division
has determined to be important to prospective purchasers.

NAC 116B.600Duties of Ombudsman for Owners in Common-Interest Communities and
Condominium Hotels: “Annual assessment” interpreted. (NRS 116B.805, 116B.815)As used
in NRS 116B.815, “annual
assessment” means both the per-unit assessments and the total budget revenues
for the association.